The International Business Times recently reported that a “number of
Microsoft investors told the new CEO
and the company’s board of directors that they should cancel endeavors
like the Xbox One next-gen gaming console, search engine Bing, and the
Surface tablet.”

The situation at hand

I believe that Microsoft has made
some serious missteps in recent years
that have resulted in the company now being in the position that it’s in. However, under Ballmer’s leadership, Microsoft also made a number of
great gains, most notably in the areas of Server, Hyper-V, and
cloud computing.

Unfortunately, Microsoft’s mistakes are pretty serious ones, and there are areas of the company
that investors question — namely, the Xbox, Surface, and Bing. Even though Surface revenue more than
doubled in the most recent quarter and interest seems to be on an uphill trajectory, the devices still receive a lukewarm
reception. Investors likely believe that the
efforts going into Surface should be devoted to more profitable
ventures. After all, Office 365 and Azure are simply exploding in
popularity on the enterprise front, so why not focus there?

Give up on the Xbox and Surface? Maybe

looking at the Surface and Xbox, I see that both work well in the
consumer space, although Surface
also crosses the line and can be used as an enterprise device. Surface
absolutely struggled initially, but as I mentioned earlier, interest in it is gaining. I think the device
itself is actually quite nice. However, the operating system — Windows 8 and Windows 8.1 — leaves a
lot to be desired. With a better operating system, Surface could be a

There was an additional reason that Microsoft had to build the
Surface. Its hardware partner ecosystem
was (and still is) a mess. Race-to-the-bottom pricing left a bad taste
in the mouths of consumers who were tired of buying what amounted to
junk. At the same time, consumers began to see products like the iPad —  pretty reasonably priced — skyrocket, thanks
to a thriving software ecosystem and well-built hardware. The Surface
was Microsoft’s answer to the market. It was a well-designed piece of
hardware, but pricing was a bit high and, again, it was saddled with
Windows 8. Today, the partner ecosystem is getting
better around Windows devices, but I don’t think Microsoft will see real light at the end of
the tunnel until Windows 9 hits the scene.

regard to Surface specifically, it should
continue to be developed if for no other
reason than to keep a quality option in the market. The Surface should
also serve to keep partners on notice that Microsoft will step in and
take its own corrective action if its partners are unable to do so.

for the Xbox, it’s certainly a consumer play, but as we move inexorably
closer to the Internet of Things and
as new home automation options come to play, the Xbox is a natural fit as
the managing platform for this kind of activity. It’s a hub into the
home. While it most likely wouldn’t have an immediately negative impact on
Microsoft, it could limit the company’s future
opportunities with regard to the consumer.

seems as if investors want Microsoft to focus solely on the enterprise,
but the consumer front is also important, especially if the company wants to compete with Google and Apple. Today’s
Bring Your Own Device (BYOD) trends can impact tomorrow’s enterprise decisions,  and Microsoft can’t be left out of the equation. This makes the Xbox important as a strategic asset, and one that Microsoft
needs to find ways to leverage further.

The verdict: Microsoft should keep both the Surface and the Xbox.


And then there’s Bing. What can I say about Bing that hasn’t already been said?  It’s an okay search engine,
but not a great one. I really want to like it, but every time I use
it, I end up disappointed. I do like Bing’s image and video search
features far more than Google’s, but given that traditional web search
still dominates my needs, I always find myself
going back to Google for those services.

is definitely intended to be the anti-Google. It’s here that I think
Microsoft may have to consider some
tough options. Most importantly, if they keep Bing around, Microsoft
needs to improve the results to be more actionable. However, I don’t see
Bing going anywhere anytime soon, especially since the company embeds
Bing in additional products.


What we all believe — me, analysts, and even investors — really doesn’t
matter. What does matter is that
Microsoft’s new CEO needs room to make the decisions that he feels are
in the best interests of the company. More importantly, he needs to be
afforded the opportunity to take a long view and not work to ridiculous
quarter-to-quarter expectations.

Do you think Microsoft should pull the plug on the Surface, Xbox, and Bing? Share your thoughts in the discussion thread below.